DEERFIELD BEACH, FL-Condo owners in Florida are getting desperate. That is, if the concession and enticement programs at nearly every community are any indication. Jack McCabe, chief executive officer of McCabe Research & Consulting here, says concessions ranging from free maintenance or homeowners dues to luxury cars are now commonplace across many Florida markets.

“We’re seeing some really creative and imaginative concessionary programs,” he says.At the Kensington at Royal Palm Beach, for instance, new purchasers can get 13% of the unit’s purchase price rebated as a sort of security deposit. The building’s owners also guarantee the unit buyer a competitive market rate income for two years. “There’s a question as to whether this practice is legal,” says McCabe. On a three-bedroom unit, the guarantee is about $1,800 per month, which over two years amounts to $44,000, he explains. Add the 13% rebate–which on a $300,000 unit would be $39,000–it works out to about $80,000.

“So they’re giving away more than $80,000 in incentives that are done after the closing, separate from the sales agreement,” says McCabe. “You could make the case that it’s inflating values because the seller truly is only receiving $220,000 in value off of that $300,000 sale. I would think the mortgage lenders would have some real problems with that type of business model because, in essence, if they’re[the lenders] making an 80% loan for a $300,000 unit, they’re loaning out $260,000 on a unit that truthfully is only worth $220,000. But because of the way the rebate is structured–after the closing–it’s being hidden from the lender. There are questions as to whether that’s legal, but it’s nonetheless happening.”

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